Buffett Drops Positions On Wells Fargo, Bets On Gold And BTC

Buffett drops his positions on Wells Fargo and is betting on gold and Bitcoin as the rising inflation is fueling the case for these assets as we are reading more in today’s bitcoin news.

Warren Buffett drops his positions on Wells Fargo, along with Berkshire Hathaway, selling 100 million shares. The Oracle of Omaha is still trimming his positions in bank stocks and he is propelling the bull case for gold and bitcoin. Berkshire held about $32 billion in equity in Wells Fargo at one point. According to the reports, the investment conglomerate now owns 3.3% in equity of the lender that is worth about $3.36 billion.

During his career, Buffett emphasized the importance of value investing, saying that he prefers businesses with predictable and stable operations which can result in consistent profitability. Two months ago, Well Fargo was hit with a $2.4 billion loss which is the first loss since the 2008 housing crisis. After the disappointing quarterly report, the company said they will cut its dividends to 10 cents per share. Allen Tischler, a Moody’s analyst said:

 “The outlook change reflects Wells Fargo’s slower-than-anticipated pace in resolving its legacy governance, oversight, compliance, and operational risk management deficiencies. The slow pace weighs on its expense base, further undermining its earnings potential against the backdrop of challenging operating conditions.”

The confluence of the losses and the dividend cut, made Buffett trim his positions. The persistent theme in Berkshire’s portfolio is its investment in Barrick Gold. While the decreasing exposure to the US Banking sector remains, Buffett invested in Gold and Japanese trading companies. The decision shows that Buffett is looking for safety in terms of cash flow and hedge against the rising inflation. The Barrick Gold investment only adds fuel to the bull case of Bitcoin because of the perception of BTC as a store of value being improved.

Other notable investors such as the Winklevoss Twins believe that Bitcoin is the digital gold and will compete against the real gold over the long-term. The upside potential makes it an attractive investment since the BTC market capitalization is only 1.5% gold. Cameron Winklevoss said that bitcoin already made major ground on gold:

 “Bitcoin has made significant ground on gold — going from white paper to over $200 billion in market capitalization in under a decade. It will continue to cannibalize gold dramatically over the next decade.”

Wall Street veteran and host of the Keiser Report, Max Keiser believes that Buffett quitting the dollar is bullish for the price of Bitcoin and gold.